Oil prices rose on Tuesday, touching a six-month high over $60 a barrel as a flurry of US refinery problems stoked supply fears leading into peak summer driving season. US crude settled 62 cents higher at $59.65 a barrel, after earlier reaching $60.48 a barrel, the highest level since November 11. London Brent rose 45 cents to settle at $58.92 a barrel.
The gains came after a fire struck a gasoline-making unit at Flint Hills Resources' 288,000 barrel-per-day oil refinery in Corpus Christi, Texas. The oil market closely monitors refinery operations in the spring as suppliers try to boost gasoline inventories ahead of summer vacation season when demand peaks. "(The) Flint Hills news definitely gave a boost to products," said Tom Bentz, analyst at BNP Paribas Commodity Futures Inc.
The fire followed an explosion on Sunday at Sunoco's oil refinery in Marcus Hook, Pennsylvania, forced the company to shut a gasoline-making unit and slow crude oil processing. Adding support to oil, equity markets rose slightly as Wall Street remained hopeful that the global recession was moderating. Commodities markets have closely tracked the stock market in recent months as dealers seek signs of economic health.
But gains on the oil and equities markets were tempered by weak US housing data for April showing housing start permits dropping to a record low. "Housing led the US economy into recession and the April figures released today are a stark reminder that we are not yet out of the woods," Harry Tchilinguirian, BNP Paribas' senior oil analyst, said.
Oil prices have been on an upward trend since mid-April in equity-led rallies. They have recovered from below $33 in December last year after a plunge from record highs above $147 in July. Nigerian security forces clashed with militants on Tuesday close to an oil flow station in the western Niger Delta operated by Chevron.
Africa's top oil and gas exporter is on alert for retaliatory attacks after launching its biggest offensive for several years last week against the militants. Traders will shift their focus to two sets of US weekly oil data later on Tuesday and Wednesday. Analysts expect the data to show falls in crude oil and gasoline inventories by 200,000 barrels and 1.2 million barrels, respectively.